Tate & Lyle (TATE) produced a lacklustre performance compared with last year's robust growth, but it shouldn't detract from the food producer's longer-term prospects. The reported numbers also conceal what was a solid operational performance. Adjust for a net £2m of one-off costs and last year's £66m credit - related to restarting production at a plant in Alabama - and Tate & Lyle's pre-tax profit edged up 2 per cent to £179m.
The group's lower-margin bulk ingredients operation, accounting for over 70 per cent of sales, grew operating profit 7 per cent to £101m. Corn sweetener volumes increased 2 per cent in North America, but slipped 7 per cent in Europe. That was due to lower quotas in non-EU markets and a strike in Turkey. Moreover, although the US drought has hit corn quality and boosted corn prices, analysts at Citi think the group is "well-placed to pass on price increases".
At the speciality food unit, which makes such products as sweetener Splenda, operating profit slipped 7 per cent to £108m. Good growth in the US was partially offset by soft European conditions and performance suffered from a rise in costs associated with restarting production at the Alabama plant.
Canaccord Genuity expects full-year adjusted EPS of 59.6p (56.4p in 2012).
TATE & LYLE (TATE) | ||||
---|---|---|---|---|
ORD PRICE: | 722.5p | MARKET VALUE: | £3.4bn | |
TOUCH: | 721.5-722.5p | 12-MONTH HIGH: | 747p | LOW: 628p |
DIVIDEND YIELD: | 3.5% | PE RATIO: | 13 | |
NET ASSET VALUE: | 210p* | NET DEBT: | 40% |
Half-year to 30 Sep | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
---|---|---|---|---|
2011 | 1.54 | 241 | 39.5 | 7.10 |
2012 | 1.63 | 172 | 30.8 | 7.40 |
% change | +6 | -29 | -22 | +4 |
Ex-div: 28 Nov Payment: 4 Jan *Includes intangible assets of £329m, or 71p a share |